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After Mayor Greg Ballard's upset victory at the polls last November, local arts leaders were in a panic. They worried the
no-nonsense former Marine would put public safety on a pedestal and slash Indianapolis' funding for cultural groups.

Now, they say their worst suspicions are being confirmed. Late last month, City-County Council President Bob Cockrum, who,
like Ballard, is a Republican, warned the Indianapolis Consortium of Arts Administrators that the mayor intends to phase out
the entire $1.5 million in funding it provides for cultural education and outreach.

"We obviously all recognize there are going to be cuts he needs to make," said Glen
Kwok, executive director of the International Violin Competition of Indianapolis. "But what was
outlined to us was not reasonable. To have a three-year phase-out program to zero was completely unfathomable."

And cuts to arts funding are just the beginning.
Joseph Wynns, director of Indy Parks and Recreation, said the mayor has asked him to chop $2.3 million,
or 13 percent, from his department's $17 million budget.

Community leaders acknowledge the mayor must look for cuts to live within the property-tax caps
passed by the Indiana General Assembly last spring. Those caps will phase in until 2010, greatly reducing
local government's largest source of revenue.

But they fret that areas like arts and parks are crucial quality-of-life amenities that help make
Indianapolis an attractive place for professionals to live.

"It's a recruitment and retention kind of thing," said Cindy Porteous, executive director
of the Indianapolis Parks Foundation, a not-for-profit that has spent $11 million for Indianapolis parks
since its founding in 1991.

"We want to get people here and keep them here. When you don't have mountains and oceans, we look to our parks and greenways
as the amenities we have to sell."

She said the foundation would do what it could to narrow funding gaps, but lacks the financial firepower to cover operating
costs.

Ballard, who will
present his first city-county budget Aug. 11, declined to comment for this article. But on July 28, at the
first of his promised open "quarterly budget reviews," his message was simple: Indianapolis has been spending outside
its means. If it doesn't trim back to core business, local government's annual deficit will widen beyond
$73 million within four years.

Ballard has said that public safety is the only area that won't be reduced and that he's going
to try to find it more funding.

According to the mayor, Indianapolis' 2008 budget had $874 million in property taxes. His projected
2009 budget--which won't include major line items like legacy police and firefighter pensions that the
state assumed when it established the caps--will have only $771 million.

"We're working very hard to try to live within our revenue streams," City Controller
David Reynolds said. "It could get to the point that we would need to stop doing some things."

Ballard's top aides aren't willing to discuss
specifics, though details are starting to trickle out.

Parks Director Wynns, a carryover from Mayor Bart Peterson's administration, said Ballard has
established hard spending ceilings for every expense the mayor oversees. Ballard asked department heads
to decide on specific cuts themselves.

With parks, for instance, Ballard asked Wynns to make two lists of services: one essential, the other non-essential. He asked
for the cuts from the non-essential list.

"The danger you run into with this model [is], what I may consider to be nonessential, the community may consider essential,"
Wynns said. "If you pull the wrong thing, you could have a crisis out there, and that's what Mayor Ballard has told us
in these cuts. He doesn't want [any] major issues. But there will be some people upset."

Wynns said the heads of other departments, including
Metropolitan Development and Public Works, are going through the same process. To soften the budget blow,
Ballard has instructed department heads to look for revenue enhancements in addition to cuts.

It's tricky territory. The public isn't likely
to be any more receptive to fee hikes than to service reductions.

"I do have the ability to generate revenue, but I've got to be careful not to raise fees
on swimming pools and programs or Eagle Creek that price myself out of the market," Wynns said.
"I can't all of a sudden start charging $10 to go swimming. There won't be anybody there but me."

Daniels' playbook

When Gov. Mitch Daniels, a Republican,
took office in 2005, he also ordered strict belt-tightening and balanced budgets. The fiscal discipline
helped the state last month win a coveted AAA credit rating for Standard & Poor's. It was the first time
Indiana had received the highest mark.

Reynolds, who worked in the State Budget Agency before he joined the mayor's administration, said Ballard is attempting to
follow the same playbook.

He argues that local government is bloated. He noted, for instance, that Indianapolis and Marion County together have five
human resources departments, along with two accounting departments and two payroll departments.

Such waste, he argues, contributes greatly to the
budget deficit.

"The
status quo gets us to that point, with expenditure exceeding revenue," he told IBJ. "You can't maintain
that mode of operation."

But the budget strains don't stem solely from bloat. Marion County's property tax reassessment,
for instance, has led to months of delays in tax collections. As a result, local government has had to
borrow to keep cash flowing. Reynolds put the extra interest cost of such maneuvers at $30 million annually.

Jim Steele, the City-County Council's chief
financial officer, said Ballard likely will need to make significant adjustments for months after he
announces his budget.

Marion County is still wrapping up its 2007 property tax reconciliation bills and related appeals, Steele noted. Billing for
2008, already long delayed, is likely still months away. And every figure related to property tax caps' future impact is only
an estimate. Real-world results could vary dramatically.

"I don't think even they know the numbers yet," said Steele, a former city controller
under mayors Bill Hudnut and Steve Goldsmith. "There are so many unknowns. It's going to be a lot
of educated projections and hope for the best."

City-County Council Minority Leader Joanne Sanders, a Democrat, said Ballard supported and took
credit for the Legislature's changes that now are forcing Indianapolis into the red.

She said he left himself no choice but to slash
essential services.

"The
current administration acted as if there would be $70 million in fluff," Sanders said. "It was a good campaign slogan,
and it got them elected. But now they have to live with the reality of the budget."

IUPUI political science professor Brian Vargus said it's impossible to anticipate whether the
public will become as outraged over service reductions as they were over their property tax bills last
year.

But he expects community
leaders to balk at Ballard's vision of smaller government.

"Oliver Wendell Holmes said taxes are the price we pay for civilization. Ballard's [idea
of] civilization is some kind of Marine Corps," Vargus said.

"I particularly expect the business community to find it less than appealing, because it
runs counter to the stream of Indianapolis development as a world-class city that's been set in motion
over the last couple of decades."

Two visions, one city

Longtime Indianapolis residents remember the sleepy "Naptown" of decades past, before Unigov city-county consolidation,
pro sports, cultural arts and a steady stream of conventioneers made it a destination city.

Cultural leaders fear Ballard's campaign for
leaner government will greatly set back that progress.

The Arts Council of Indianapolis, which has studied the impact of not-for-profit cultural organizations,
puts their annual contribution to the Indianapolis economy at $468 million and 15,088 jobs.

Cultural leaders consider the $1.5 million Indianapolis
spends to pay for arts outreach and education a pittance--but a highly symbolic one.

They say children and the working class, who
are often introduced to the arts via subsidy, would be hurt most.

"There are few line items in the budget with such a good rate of return," said Kwok
of the International Violin Competition. "And if public safety is truly at the top of the mayor's
agenda, which I know it is, one must consider the long-term impact on today's youth."

Since he took office, Ballard has noted cultural
leaders' concerns, and pledged to assist them wherever possible, particularly from the bully pulpit.

But many arts leaders have remained skeptical.

"Part of the problem is, Mayor Peterson
worked so hard from the beginning to establish a profile in the cultural community," said John Pickett,
executive director of the Indianapolis Opera. "When he went in to help major arts organizations, his statements
had much more weight than Mayor Ballard's would."

Other cities Indianapolis competes against directly--both for businesses and talent--do far more
than even Peterson did to support the arts, Pickett pointed out.

Denver, for example, has a dedicated sales tax as well as a seat tax at major sporting events,
which together generate $13 million for its cultural arts community annually.

It doesn't work like that here. In addition to the
$1.5 million in direct city funding Ballard is considering cutting, Indianapolis provides another $1
million to its arts community through the Capital Improvement Board, which oversees the city's sports
venues.

CIB Chairman Bob
Grand said he hasn't made any plans yet to cut into that $1 million. He's waiting for Lucas Oil Stadium to
open its doors. After that, Grand said, CIB will know what it can afford.

But its top priority will be stadium expenses.

"It doesn't make sense to make cuts when, in our case, we don't have facts on the cost of
Lucas Oil's operation," Grand said. "I've got to get in there. Then we'll assess it."